Advertisers want broadcasters to make up for missed spots

No two ways: Emami Ltd director Aditya Agarwal says he wants the right returns for the money he is spending on the TV channels. Indranil Bhoumik / Mint

Updated: Thu, Nov 20 2008. 10 14 PM IST

Mumbai: The 10-day strike by television industry workers may have been called off after producers accepted their demand for a wage increase, but trouble is brewing for broadcasters on other fronts.

No two ways: Emami Ltd director Aditya Agarwal says he wants the right returns for the money he is spending on the TV channels. Indranil Bhoumik / Mint

Media buyers, who purchase television airtime for running commercials, and advertisers themselves are now demanding compensation in the form of bonus spots and other sweeteners from TV channels to make good the loss in viewership during the strike that ended on Wednesday.

With viewers tuning out of an endless rerun of serials, TV viewership for general entertainment channels, including those run by Star India Pvt. Ltd, Multiscreen Media Pvt. Ltd (formerly SET India Pvt. Ltd) and Zee Entertainment Enterprise Ltd, dropped by at least 35%, according to media buyers who didn’t want to be named.

Advertisers were, however, still paying the same ad rates as per contracts based on television rating points that the serials had before the strike.

Complicating the situation, make-up artistes and sound recordists were still on strike at the time this edition went to press. If they continue to stay away from work, programme shoots could be thrown out of gear, which would extend the viewership loss for TV commercials, media buyers say.

Television channels earned Rs6,766 crore in ad revenue last year, according to the Lintas Media Guide 2008. General entertainment channels account for 35% of the amount, according to Chandradeep Mitra, president, Mudra MAX, the specialist media unit of the Mudra Group. Total ad spending reached Rs17,356 crore in 2007, up 3.5% over 2006.

After the strike ended, leading media agencies are seeking some free airtime on premium new and existing programmes broadcast by TV channels, special ad positions or heavily discounted packages as compensation.

“Yes, we are pushing for broadcasters to give us free airtime on premium properties or at least discounted packages,” said a leading buyer. “Once programming is back on air, you could see ad breaks getting longer. It’s only fair as we represent client interests.”

Various broadcasters, however, say they are not open to the idea of offering bonus spots and freebies as compensation, adding it was never part of any agreement with advertisers and agency associations.

Some buyers such as Mudra MAX’s Mitra are, however, waiting for the publication of television ratings before taking up the issue.

“Once we know the ratings for that period and the corresponding loss in viewership, we can start discussions with channels and hopefully arrive at a mutually agreeable compensation, which can either be in discount or ‘make good’,” Mitra said.

“Make good” is a term that refers to compensatory inventory or non-paid-for inventory that is offered by a channel to compensate for missed spots or any loss of viewership.

“While many of the channels may have lost revenue during this time, they also saved huge amounts on production as a large component of cost was eliminated due to repeat telecasts of programming,” Mitra said.

The demands are obviously proportionate to the quantum of advertising that ran during the 10-day strike. Mitra explains that if there was a 40% drop in television rating points, a channel could make good 40% of the booked inventory for the client.

“Clients with campaigns to play out could pick this option, if the money is already committed to the channel. Alternately, in certain cases where the ad campaign has ended, the channel could extend the period of usage or just give them a discount,” he said.

“While media buyers will try and leverage spots on good shows, channels may keep prime properties such as a popular movie outside the ambit of make good. A channel would rather offer buyers compensatory ad slots on shows where they have available inventory, rather than on properties which have the potential to attract high rates and buyers,” Mitra added.

Some buyers such as Sejal Shah, vice-president, India Media Exchange, the media buying unit for Starcom MediaVest Group and Zenith Optimedia, said they will take stock of the damage over the next two days.

“In all likelihood, channels will offer to compensate their clients through value-adds such as sponsorships for movies, contests, tickers, etc. to make up for the loss in viewership during this time,” Shah said.

But Shah said her agency would prefer bonus spots because its clients such as HDFC Bank Ltd, ING Vysya Life Insurance Co. and Kotak Mahindra Group had either launched new campaigns or resumed advertising after a long gap during the strike period. “So we will be negotiating for bonus spots.”

A media buyer, however, says that while channels are willing to compensate for the loss in visibility, they aren’t happy about offering bonus spots as that would mean 100% compensation.

Advertisers are clearly supporting or pushing their media agencies to seek compensation.

The Indian Society of Advertisers (ISA) and the Advertising Agencies Association of India (AAAI) had in an advisory requested advertisers not to pull their commercials off the air during the strike period in a show of support for broadcasters, said Bharat Patel, chairman of Procter and Gamble Hygiene and Health Care Ltd and chairman of ISA.

“But we also said that if the strike continues and programming was not introduced, then advertisers and agencies could decide to take action as per what they see fit, and decide specific commercial terms with broadcasters,” Patel said. “It’s up to individual agencies and advertisers to seek compensation from broadcasters.”

He said it was his personal opinion that broadcasters, who have not had to pay anything for fresh programming in the last 10 days, should pass on cost savings to advertisers.

“Advertisers should be adequately compensated,” said Aditya Agarwal, a director of Emami Ltd, the personal care products maker. “I have no interest in what costs are saved by broadcasters in terms of programming or how they manage the compensation. My interest lies in getting the right returns for the money I am spending on the channels.”

Many broadcasters, however, say that discounts and bonus spots were not specified in the ISA-AAAI advisory.

“As per the ISA, if the strike continues, then bilateral negotiations will take place between various advertisers and concerned broadcasters for further deals/contracts,” said Joy Chakraborthy, chief revenue officer at Zee Entertainment Enterprises. “Therefore, I cannot understand how buyers can suddenly ask for compensation when the strike is, for all practical purposes, over.”

“All spots were run, weren’t they?” said another broadcaster, who spoke on condition of anonymity. “They did get what they paid for. Also I am surprised that media agencies think it’s all right to just skip the rules of AAAI, and arm-twist channels into giving them free inventory.”